Correlation Between GLAXOSMITHKLINE and Hooker Furniture

Can any of the company-specific risk be diversified away by investing in both GLAXOSMITHKLINE and Hooker Furniture at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining GLAXOSMITHKLINE and Hooker Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GLAXOSMITHKLINE CAP INC and Hooker Furniture, you can compare the effects of market volatilities on GLAXOSMITHKLINE and Hooker Furniture and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in GLAXOSMITHKLINE with a short position of Hooker Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of GLAXOSMITHKLINE and Hooker Furniture.

Diversification Opportunities for GLAXOSMITHKLINE and Hooker Furniture

-0.29

Correlation Coefficient

GLAXOSMITHKLINE  Hooker Furniture

Very good diversification

The 3 months correlation between GLAXOSMITHKLINE and Hooker is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding GLAXOSMITHKLINE CAP INC and Hooker Furniture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hooker Furniture and GLAXOSMITHKLINE is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on GLAXOSMITHKLINE CAP INC are associated (or correlated) with Hooker Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hooker Furniture has no effect on the direction of GLAXOSMITHKLINE i.e., GLAXOSMITHKLINE and Hooker Furniture go up and down completely randomly.

Pair Corralation between GLAXOSMITHKLINE and Hooker Furniture

Assuming the 90 days trading horizon GLAXOSMITHKLINE CAP INC is expected to under-perform the Hooker Furniture. But the bond apears to be less risky and, when comparing its historical volatility, GLAXOSMITHKLINE CAP INC is 6.9 times less risky than Hooker Furniture. The bond trades about -0.09 of its potential returns per unit of risk. The Hooker Furniture is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,565  in Hooker Furniture on September 5, 2024 and sell it today you would earn a total of  254.00  from holding Hooker Furniture or generate 16.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	89.06%
Values	Daily Returns

GLAXOSMITHKLINE CAP INC  vs.  Hooker Furniture

GLAXOSMITHKLINE CAP INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GLAXOSMITHKLINE CAP INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, GLAXOSMITHKLINE is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Hooker Furniture

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hooker Furniture are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Hooker Furniture unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GLAXOSMITHKLINE and Hooker Furniture

The main advantage of trading using opposite GLAXOSMITHKLINE and Hooker Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GLAXOSMITHKLINE position performs unexpectedly, Hooker Furniture can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Hooker Furniture will offset losses from the drop in Hooker Furniture's long position.

The idea behind GLAXOSMITHKLINE CAP INC and Hooker Furniture pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.